Hi, I was just wondering something...What's the difference between continuous delta heging and doing it at discrte times ? Do we lose money doing this ? What is then the best way to decrease our loss ?Other question. Suppose that we are gamma long and we want to delta hedge and the stock has a positive trend, should we hedge now or we can wait to hedge ? I think that a stock with a positive trend is inducing an increase of the delta, but we are long gamma so we will have to sell some stocks in order to reach the new delta, thus it is better to wait cause we will sell it at a better price. Is that right ? But what if we hadge right now and the stock continues to increase ?What now with a positive gamma and a negative trend ? and with a mean reverting stock ?Thank you for ur help.Daoud.Happy new year.

QuoteOriginally posted by: Da0udWhat's the difference between continuous delta hedging and doing it at discrete times ? Do we lose money doing this ? What is then the best way to decrease our loss ?Derman´s paper on discrete hedgingQuoteOriginally posted by: Da0udOther question. Suppose that we are gamma long and we want to delta hedge and the stock has a positive trend, should we hedge now or we can wait to hedge ? I think that a stock with a positive trend is inducing an increase of the delta, but we are long gamma so we will have to sell some stocks in order to reach the new delta, thus it is better to wait cause we will sell it at a better price. Is that right ? But what if we hadge right now and the stock continues to increase ?What now with a positive gamma and a negative trend ? and with a mean reverting stock ?There´s a discussion of optimal and discrete hedging on Paul Wilmott´s books as well, well worth reading.